Frost faces federal charges

SEC alleges philanthropist manipulated stock prices

Phillip Frost, the founder of Miami-based OPKO Health and the namesake of the Phillip Frost science museum, has been charged with securities fraud.

According to the U.S. Securities and Exchange Commission, from 2013 to 2018, Frost, along with nine other South Florida investors, allegedly manipulated the share price of the stock of three unnamed companies “in classic pump-and-dump schemes,” the commission said.

In a pump-and-dump scheme, an investor purchases a stock, promotes the company without disclosing his ownership interest, and then sells the shares as the value rises.

Frost allegedly participated in two of these three schemes.

“In every scheme … some combination of [four others charged] and Frost either explicitly or tacitly agreed to buy, hold or sell their shares in coordination with one another, knowing that a pump and dump was in the offing that would allow them all to profit handsomely,” the SEC alleges.

OPKO Health was also named as a defendant in the SEC’s complaint.

Trading in shares of the pharmaceutical firm were halted Friday afternoon, but afterhours trading showed an 18 percent decline in the pharmaceutical company.

A spokesperson for OPKO said the company was reviewing the charges and could not immediately comment.

Frost is also chairman of publicly held investing group Ladenburg Thalmann.

Shares in that firm were down 15 percent after hours.

The SEC names South Florida businessman Barry Honig as the ringleader of the alleged scheme.

The arrangement allegedly involved purchasing stock at steep discounts through shell companies or at terms highly unfavorable to the given company.

Then, the SEC alleges, Honig would coordinate with Frost and others to manipulate coverage and price movement of the stock.

Honig could not immediately be reached for comment.

The alleged fraudsters generated more than $27 million from the unlawful stock sales, while causing “significant harm to retail investors who were left holding virtually worthless stock,” the SEC said in its release.

The agency did not name which companies were the targets of the schemes.

Frost, a medical doctor and serial entrepreneur, and his wife, Patricia, pledged $45 million to open the science museum along Miami’s bayfront, including an extra $10 million after the project ran behind on costs. Forbes lists Frost’s net worth at $2.6 billion.

A Philadelphia native and dermatologist by training, Frost sold two pharmaceutical companies, including one-time Fortune 500 firm Ivax, for billions.

Last year, Frost was named the most charitable person in all of Florida. In addition to his gift to the science museum, he has donated millions to the University of Miami, including $100 million to its engineering program. The Frost School of Music is named in his honor, as is the Frost Art Museum at FIU.

Honig is a one-time former business associate of Ted Farnsworth, the current CEO of MoviePass parent company Helios & Matheson. Farnsworth is not named in the SEC’s complaint.